Techno-X USA Inc. v. Spartan Forge LLC

majority opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

TECHNO-X USA INC., )

)

Plaintiff/Counterclaim- )

Defendant, )

)

v. ) C.A. No. 2024-1313-LWW

)

SPARTAN FORGE LLC, and WILLIAM )

J. THOMPSON, )

)

Defendants/ )

Counterclaim-Plaintiffs, )

)

v. )

)

VOSKER CORPORATION, and JIMMY )

ANGERS, )

)

Counterclaim- )

Defendants.

MEMORANDUM OPINION

Date Submitted: July 8, 2026

Date Decided: October 15, 2026

David E. Wilks, Scott B. Czerwonka & Matthew C. Conover, WILKS LAW, LLC, Wilmington, Delaware; Counsel for Techno-X USA Inc., Vosker Corporation, and Jimmy Angers

Richard L. Renck & Michael B. Gonen, DUANE MORRIS LLP, Wilmington,

Delaware; Lewis Rhodes, RESTON LAW GROUP, LLP, Reston, Virginia; Counsel for Spartan Forge LLC and William J. Thompson

WILL, Vice Chancellor

Techno-X USA Inc. invested in Spartan Forge LLC as part of a partnership

between Spartan Forge and Techno-X’s parent, Vosker Corporation. They planned

to combine Spartan Forge’s predictive hunting software with Vosker’s trail camera

technology. Their agreements granted Techno-X a minority equity interest,

exclusivity and governance protections, and defined paths to acquire Spartan Forge.

While accepting Techno-X’s capital, Spartan Forge’s managing member

secretly negotiated an asset sale to Vosker’s main competitor. He pursued that sale

without the required approvals while putting off the completion of a services

agreement with Vosker. Spartan Forge’s cofounders devised a plan to shed

Techno-X as an investor. Spartan Forge provoked pretextual contractual defaults to

terminate Techno-X’s membership and forcibly redeem its units. Techno-X sued.

In the first phase of this bifurcated proceeding, I find that Spartan Forge

breached the exclusivity and consent provisions in the parties’ agreements and that

its managing member breached a budget-reporting obligation. I also conclude that

Spartan Forge lacked valid grounds to terminate Techno-X’s membership. As relief,

I award nominal damages, declare the termination and redemption invalid, and

restore Techno-X’s membership and governance rights. To ensure this relief is not

illusory, I equitably extend certain contractual deadlines. But I decline to grant

additional exclusivity, a permanent injunction, or fee shifting. The remaining

counterclaims await the second phase of this proceeding.

I. BACKGROUND

The following facts were stipulated to by the parties or proven by a

preponderance of the evidence at trial.1

A. Vosker and its Industry

Vosker Corporation is a Canadian entity headquartered in Quebec that

provides surveillance and monitoring solutions in the hunting and wildlife space.2 It

was founded in 2018 by brothers Jimmy Angers (“Angers”) and Danny Angers,

along with industry veteran Yan Gagnon—the founder of trail camera company

SpyPoint.3 Angers currently serves as Vosker’s President and Chief Executive

Officer.4

Vosker operates through several wholly owned subsidiaries, including

Techno-X USA Inc.—a Delaware corporation created to facilitate Vosker’s business

See Joint Pre-trial Stipulation and Order (Dkt. 168) (“PTO”). Trial occurred over two days, during which five fact witnesses testified live. Trial testimony is cited as “[Name] Tr.” See Apr. 15-16 Trial Trs. (Dkts. 182-84). The trial record contains 827 joint exhibits, including six deposition transcripts. Exhibits are cited by the numbers provided on the parties’ joint exhibit list as “JX __,” unless otherwise defined. See Ex. A to Joint Pre-trial Stipulation and Order (Dkt. 168) (Joint Ex. List). Pincites are to the joint exhibit pagination. Exhibits lacking internal pagination are cited by the last four digits of their Bates stamps. Deposition transcripts are cited as “[Name] Dep.” See Notice of Lodging of Deps. (Dkt. 177).

PTO ¶¶ 30, 37; Angers Tr. 14-15 (describing Vosker’s product lines, which are comprised of both “physical cameras” and its “software”).

Angers Tr. 8. In 2019, the founders “incorporated [the] SpyPoint brand under Vosker.” Id. at 10.

Id. at 10.

in the United States.5 Techno-X was used to “make the investment” at issue in this

litigation.6

Vosker operates within a “very competitive,” “mature” market.7 It is one of

four principal players in the remote area monitoring and hunting camera industry,

alongside Plastic Research and Development Corporation (“PRADCO”)’s Moultrie

brand.8 To keep pace, Vosker constantly strives to innovate its products.9

B. The Early Partnership

Vosker identified Spartan Forge LLC as a potential business partner in late

2021.10 Spartan Forge is a Delaware limited liability company that develops

technology for the “outdoor activities market,” founded by William J. Thompson

and Ted Lavon Belser II.11 Vosker hoped to combine Spartan Forge’s predictive

software, which forecast “when” animals would move, with field data from Vosker’s

SpyPoint cameras showing “where” the animals were located.12

PTO ¶ 29; Angers Tr. 10.

Angers Tr. 10-11.

Id. at 21-22.

Id. at 22-23; PTO ¶ 35. PRADCO is an Arkansas corporation that operates brands including Pradco Outdoors, Moultrie Mobile, and Moultrie Products. PTO ¶ 35. 9

Angers Tr. 22.

Id. at 24; PTO ¶¶ 38, 39.

PTO ¶¶ 32-34.

Angers Tr. 24-26; Belser Tr. 488-90.

An integrated product promised Vosker a competitive edge in a saturated

market and an improved user experience.13 Although Vosker contemplated building

a similar product internally, it felt that a partnership with Spartan Forge would be a

“better and faster” option.14 Spartan Forge also stood to benefit from the partnership,

which would offer it access to Vosker’s “large user base,” “large number of

cameras,” and “large amount of data.”15 The partnership also gave Spartan Forge

the potential for a liquidity event.16

The parties first explored a partnership through a licensing arrangement.17

Spartan Forge granted Vosker an exclusive, worldwide license to use data extracted

from its predictive software in exchange for $150,000 upfront, plus monthly

payments of $45,000.18 The agreement barred Spartan Forge from engaging with

Vosker competitors.19

After the license agreement expired in March 2023, Vosker and Spartan Forge

began to discuss a larger-scale strategic investment.20 In September 2023, they

Angers Tr. 24-26.

Rousseau Tr. 472-73.

Belser Tr. 498; see Thompson Tr. 594-95, 616-17.

Angers Tr. 295; Laaboudi Tr. 309-10.

Laaboudi Tr. 308-09.

PTO ¶ 39.

JX 12 § 9.3.

PTO ¶ 41.

executed a non-binding indication of interest contemplating that Vosker would

acquire a significant equity stake in Spartan Forge.21 In January 2024, they executed

a term sheet that conditioned closing on the negotiation of definitive agreements.22

Negotiations continued, culminating in an Updated Binding Term Sheet (the

“Term Sheet”) signed on March 8, 2024.23 Among the Term Sheet’s binding

provisions was an “Exclusivity; Restriction of Business” clause (the “Exclusivity

Provision”).24 This provision required that, for 12 months, Spartan Forge would not,

without Techno-X’s prior consent, “solicit, initiate or participate in any discussions

or negotiations with,” “encourage or respond to any inquiries or proposals by,” or

“enter into any agreement” with a third party concerning the sale or disposition of

Spartan Forge’s equity or material assets.25 The Term Sheet separately barred

Spartan Forge from providing services or selling products to any Vosker

competitor.26 The Term Sheet was structured to protect Vosker’s interests while

JX 92; PTO ¶¶ 42-43.

PTO ¶¶ 44-45.

Id. ¶¶ 46-48; JX 252 (“Term Sheet”).

Term Sheet 4.

Id.; PTO ¶ 50.

Term Sheet 4.

incentivizing the parties to increase Spartan Forge’s value in anticipation of a future

acquisition.27

On May 17, 2024, the parties—both advised by counsel—executed a Second

Amended and Restated Operating Agreement for Spartan Forge (the “LLC

Agreement”).28 Techno-X agreed to make capital contributions to Spartan Forge in

exchange for Series A Preferred Units representing an initial 6% minority equity

interest.29 Techno-X was to make an initial capital contribution of $500,000 at

closing, plus 15 monthly payments of $70,666.66 that would allow Techno-X to

increase its stake to 12% over time.30

The LLC Agreement outlined two potential paths for Techno-X to acquire

Spartan Forge.31 The first was a “Majority Right to Purchase,” under which

Techno-X had the right to acquire a total 60% interest in Spartan Forge, inclusive of

units previously acquired, at a $15.6 million valuation “within twelve (12) months

from the date” any Spartan Forge equity “w[as] first issued” to Techno-X.32 The

Belser Tr. 542-44; Thompson Tr. 612-13; Laaboudi Tr. 407.

PTO ¶ 52; JX 330 (“LLC Agreement”); Laaboudi Tr. 333; Angers Tr. 211; Term Sheet 1. 29

PTO ¶ 53; LLC Agreement sched. A. Techno-X was referred to as the “Investor” and Spartan Forge as the “Company” in the LLC Agreement. See LLC Agreement, Recitals. 30

LLC Agreement sched. A; PTO ¶ 53; Angers Tr. 77-79; Term Sheet 1; Laaboudi Tr. 331-33.

LLC Agreement § 9.8.

Id.; Thompson Tr. 665.

second was a “Global Right to Purchase,” which gave Techno-X “an exclusive right,

at its own discretion, to acquire” Spartan Forge at a 15% discount for 120 days after

receipt of an external company valuation.33 Both purchase rights were conditioned

on executing a separate services agreement addressing technical integration within

60 days.34

The LLC Agreement gave Techno-X various decisional and information

rights, including the right to receive reports and financial statements at regular

intervals and consent rights concerning certain “Major Decisions.”35 The authority

of Thompson, who served as Spartan Forge’s Managing Member, was circumscribed

by these consent rights.36 Techno-X gained the right to designate a member of

Spartan Forge’s three-member Board of Directors (the “Board”).37 Angers became

the Techno-X-designated member of the Board, joining Thompson and Belser.38

The LLC Agreement further required the parties to hold a quarterly

“Alignment Meeting” over the ensuing 24 months.39 The purpose of these meetings

LLC Agreement § 9.8; Angers Tr. 92-93, 211.

LLC Agreement § 9.8.

Id. §§ 7.2, 8.2.

Id. §§ 8.1(a), 8.2.

Id. § 8.4.

Id. § 8.4(a); PTO ¶¶ 33-34.

LLC Agreement § 9.9; Angers Tr. 94-95.

was to “verify that [Spartan Forge] and [Techno-X] [we]re in alignment with their

business objectives.”40 The Alignment Meetings had to “include a review,

discussion and approval of the Company’s financial statements, budget, Board

meeting agenda, and quarterly strategic vision.”41

C. The Services Agreement Negotiations

The parties met in Brossard, Quebec, on June 13 and 14, 2024, to discuss

integration phases, Spartan Forge’s cash-flow position, the product roadmap, and

marketing strategies.42 Vosker asked that Spartan Forge provide its financial key

performance indicators to facilitate negotiations on the commercial terms of a

services agreement.43 Vosker anticipated that, once this information was provided,

a services agreement could be finalized in short order.44

After the meeting, Spartan Forge delayed.45 It took nearly a month for Spartan

Forge to give Vosker sufficient information for it to begin drafting a services

agreement.46 By that point, the LLC Agreement’s 60-day timeline for executing a

LLC Agreement § 9.9.

Id.

PTO ¶¶ 54, 56; Angers Tr. 95, 108-09.

Angers Tr. 96-97.

Id. at 97-98.

Id. at 260-63.

Id. at 97, 226.

services agreement had nearly lapsed.47 The parties agreed to extend the deadline to

October 31, 2024.48

Between July and October, the parties negotiated the services agreement and

scheduled the first Alignment and Board meetings.49 In the interim, Vosker

undertook technical work to prepare for integration.50 The parties exchanged various

technical materials.51

On October 29, 2024, Vosker and Spartan Forge representatives met again to

discuss the services agreement and integration issues.52 During the meeting, they

resolved all outstanding issues concerning finalization of the services agreement.53

Still, Thompson refused to move forward with signing.54

D. The Undisclosed PRADCO Negotiations

Thompson’s refusal to execute the services agreement did not stem from

unresolved commercial terms. While Spartan Forge continued the services47

JX 396; JX 397; JX 459; JX 460.

PTO ¶ 57. An amendment to the LLC Agreement reflecting the extension was signed on August 27, 2024. Id.

Id. ¶ 58.

Rousseau Tr. 475.

Id. at 475, 480-81.

PTO ¶ 61.

Laaboudi Tr. 352-53; Angers Tr. 140-41; PTO ¶ 61.

agreement negotiations and received Techno-X’s capital contributions, Thompson

was secretly pursuing a potential transaction with Vosker’s “number one

competitor,” Moultrie.55

At the June 14 meeting in Quebec, Thompson told Angers that someone from

an unrelated company had offered to introduce Thompson to Moultrie.56 Angers,

understanding that Thompson had already responded to Moultrie’s outreach,

suggested that Thompson have “one call with them.”57 On June 17, Daniel Wilson—

Moultrie Mobile’s General Manager—contacted Thompson through LinkedIn.58

Thompson forwarded the message from Wilson to Angers the next day,

writing: “I can take this call and record if you want. Your call.”59 Angers responded:

“[N]o need to record. You can take the call, but please don’t say to[o] much from

your side. Ask questions to understand his needs.”60 Angers added that if prodded,

Thompson should invoke Spartan Forge’s non-disclosure agreements with Vosker

to avoid providing substantive information.61 Thompson replied, “[G]ot it.”62

Angers Tr. 8-9, 102-03; PTO ¶ 60.

Thompson Tr. 593.

Angers Tr. 101.

JX 366.

JX 367; JX 417 at 3; Angers Tr. 103-04.

JX 367.

Id.

On August 2, Thompson sent Angers a LinkedIn message suggesting that they

“meet about [his] Moultrie discussion.”63 Angers referred Thompson to Khalil

Laaboudi, Vosker’s point person on the Spartan Forge transaction.64 Thompson

never gave the requested update.65

Instead, Thompson and PRADCO’s negotiations advanced. By August 22,

Spartan Forge had received two nonbinding term sheets and a non-disclosure

agreement from PRADCO.66 PRADCO proposed combining Spartan Forge’s

mapping and hunting technologies with Moultrie’s hardware system.67 Throughout

August, Thompson exchanged multiple communications with Wilson “to get a deal

done.”68 Thompson did not provide copies of—or disclose—these communications

or the draft term sheets to Vosker.69

JX 427.

JX 434; Angers Tr. 117-18 (explaining that Angers requested that Thompson share any information he learned with Laaboudi because Thompson “was in constant communication, business communication, with [Laaboudi]” during the transaction); Laaboudi Tr. 305-08 (describing his role in the Spartan Forge transaction). 65

Angers Tr. 101, 106, 118; Thompson Tr. 631-32.

Thompson Tr. 633-37; JX 423; JX 463; JX 467.

JX 464; JX 465.

Thompson Tr. 635-37; JX 448.

Thompson Tr. 631-32, 634-35, 637. On September 4, Laaboudi asked Thompson for “the Moultrie communication / invitation [Thompson] received.” JX 37 at 54. Thompson responded: “He text[ed] me I can send a screen shot. Otherwise it’s been phone calls.” Id. The screenshot he shared was a text from “EBSCO,” the parent-affiliate of PRADCO, asking if Thompson “ha[d] a few minutes to connect any time tomorrow morning.” JX 40. No additional context was provided.

By October, the PRADCO transaction was well underway. On October 2,

Spartan Forge’s Belser and Thompson met with Moultrie’s Wilson to discuss what

PRADCO “would be willing to buy.”70 Twelve days later, PRADCO sent a revised

term sheet contemplating a $20 million asset purchase.71 Wilson wrote that the

“ultimate goal of the transaction” was to effectuate a “technical integration [of]

Moultrie” and Spartan Forge by summer 2025.72

On October 29—the same day Thompson refused to execute the proposed

services agreement with Techno-X—PRADCO sent a letter of intent to purchase

Spartan Forge’s assets for $20 million, with a target closing date of December 13.73

Thompson did not disclose the proposal to Vosker.74

In November and December, PRADCO undertook diligence of Spartan Forge

while exchanging drafts of an asset purchase agreement and discussing timing and

integration.75 On December 13, PRADCO circulated a revised letter of intent

contemplating an asset purchase agreement to be executed on December 16.76

Belser Tr. 562.

JX 541.

Id.

JX 569.

Thompson Tr. 640-41.

PTO ¶¶ 64, 66, 69.

Id. ¶ 70; JX 672 (“This letter . . . sets forth the terms and conditions upon which [PRADCO] . . . proposes to acquire 100% of the assets constituting the entire business and

Thompson believed that the PRADCO transaction was “on the doorstep” to

closing.77

E. The Manufactured Breach

As the PRADCO transaction progressed, Spartan Forge’s relationship with

Vosker deteriorated. Belser came to view Vosker as a “le[e]ch” on the business.78

He and Thompson took steps to sever the relationship.79

On October 16, Belser sent an email to Thompson titled “Declaration of

Independence from V[osker],” with the goal to “shed Vosker as an investor and sell

the company.”80 The email outlined three potential courses of action.81 The first

option was to demand that Techno-X schedule an Alignment Meeting as specified

by the LLC Agreement and declare an uncured breach when Techno-X inevitably

missed the ten-day deadline.82 The second option was to force Techno-X into a sale

enterprise of [Spartan Forge] . . . .”). Draft letters of intent and related documents had been exchanged between October and December. See JX 569; JXs 620-21; JXs 654-55; JX 710. 77

Thompson Tr. 643.

Belser Tr. 541.

Id. at 566 (explaining that once the PRADCO transaction “took hold,” Spartan Forge decided to sever ties with Vosker).

JX 555; JX 548; Belser Tr. 566-67.

JX 555.

Id.

by invoking drag-along rights.83 And the third option was to persuade Techno-X to

voluntarily divest its Spartan Forge equity.84

Spartan Forge pursued the first option. On October 25, it sent a letter claiming

that Techno-X had failed to schedule a quarterly Alignment Meeting.85 It demanded

that a meeting be held within ten days “to avoid breach of contract.”86

The parties held an Alignment Meeting on November 7.87 The LLC

Agreement dictated that Spartan Forge’s financial statements, operating budget,

Board meeting agenda, and strategic vision be reviewed, discussed, and approved at

these meetings.88 But Spartan Forge sent no materials to Vosker ahead of time.89

Instead, Belser showed spreadsheets “live on Teams” that were outdated, contained

mismatched past entries, and lacked key information.90 Angers questioned why

projections for the upcoming months excluded Techno-X’s monthly capital

Id.

JX 567; PTO ¶ 59.

JX 567.

PTO ¶ 63.

LLC Agreement § 9.9.

Angers Tr. 152-53; Belser Tr. 567-68 (admitting that the documents were not provided in advance of the meeting); see JX 830 (recording of the Alignment Meeting on Microsoft Teams).

Angers Tr. 152-53.

contributions to Spartan Forge.91 Belser responded that Spartan Forge did “not

intend to receive any more money.”92

Because the participants did not cover all required agenda items, Vosker’s

representatives attempted to schedule a follow-up discussion.93 Spartan Forge

deflected.94

On November 14, Thompson emailed Angers to say that the parties’

relationship had run its course.95 He proposed that Techno-X sell its membership

interest back to Spartan Forge at a $15.6 million valuation, with payment via a

promissory note repayable within six months.96 Techno-X declined.

F. The Notice of Termination

On November 20, Spartan Forge delivered a written notice of termination to

Techno-X, purporting to initiate the LLC Agreement’s process of terminating its

membership.97 It asserted that Techno-X breached its obligation to hold a quarterly

Alignment Meeting by failing to cover required agenda items, including the budget

Id. at 151-52.

Id. at 151.

JX 588; JX 593.

JX 615.

JX 597; PTO ¶ 67.

PTO ¶ 67.

JX 606; JX 607; PTO ¶ 68.

and strategic vision.98 It further asserted that Techno-X had “caused material harm

to [Spartan Forge’s] financial prospects” through alleged actions and omissions of

Vosker and its representatives.99

Vosker’s in-house counsel responded on Techno-X’s behalf on November

29.100 She noted that the parties had reviewed the financial statements and budget at

the November 7 Alignment Meeting and attributed their inability to cover remaining

topics to Spartan Forge’s failure to provide materials in advance.101 She emphasized

that Techno-X’s offer to continue the meeting on another date “remained

unanswered.”102 Finally, she rejected the notion that the alleged conduct supplied

contractual grounds to terminate Techno-X’s membership.103

G. The December Meetings

On December 12, Thompson and Belser participated in a video meeting with

Vosker, which Belser recorded.104 Reading from a script, Thompson represented

that Spartan Forge had done “extremely well in sales” in 2024 and felt confident in

JX 607.

Id.

100

JX 614; JX 615; PTO ¶ 68.

101

JX 615.

102

Id.

103

Id.

104

JX 831.

its “ability to sustain [itself].”105 He suggested that perhaps “in a year,” the parties

could discuss a 100% acquisition of Spartan Forge by Vosker.106

The next day, December 13—when PRADCO circulated its final letter of

intent—Spartan Forge noticed a special Board meeting for December 17 to discuss

“business matters.”107 At the December 17 meeting, Thompson presented the

proposed PRADCO transaction, describing its structure and the consents required

under the LLC Agreement.108 He proposed a Board vote to approve the transaction

in principle.109

This was the first time Angers—a Board member—had received notice of the

PRADCO transaction.110 He objected, expressing “shock[]” that Spartan Forge had

“negotiated a deal to sell all of its assets . . . to a [Vosker] competitor.” 111 Vosker’s

in-house counsel asked whether Spartan Forge had considered that the parties’

105

Id.; Thompson Tr. 654-55.

106

JX 831; Thompson Tr. 657.

107

JX 677; PTO ¶ 71.

108

JX 718; PTO ¶ 72; Angers Tr. 166.

109

PTO ¶ 73.

110

Angers Tr. 174.

111

JX 768 (“Despite having the opportunity to bring this transaction to our attention multiple times before the Meeting . . . we were not informed about this transaction until the Meeting. Moreover, the full Board was not consulted before pursuing such a transaction or engaging in any negotiations in respect thereof, nor was the Board’s consent obtained before engaging counsel and incurring other expenses in connection with such negotiations. We are at a loss to understand how this process could unfold without any notice to the Board and without the Board’s participation.”); PTO ¶ 74.

agreements prohibited it from engaging with a Vosker competitor.112 The meeting

was adjourned until December 24.113 Spartan Forge sent the transaction documents

to Vosker shortly after the adjournment.114

H. This Litigation and Subsequent Events

Techno-X filed this lawsuit on December 18, 2024, seeking emergency relief

to enjoin Spartan Forge from carrying out the PRADCO transaction due to alleged

breaches of its rights under the LLC Agreement.115 On December 19, PRADCO

notified Spartan Forge that it no longer intended to pursue the transaction, mooting

Techno-X’s request for an injunction.116

On December 30, Spartan Forge answered and asserted counterclaims against

Techno-X, Angers, and Vosker for breach of contract, breach of fiduciary duty, and

tortious interference with contract.117 It also sought a declaratory judgment that it

had the right to trigger the LLC Agreement’s involuntary termination provision.118

112

JX 718.

113

PTO ¶ 74.

114

JXs 719-22; JX 733; Angers Tr. 174-75.

115

Verified Compl. (Dkt. 1).

116

Letter from Counsel (Dkt. 5); PTO ¶ 6.

117

Answer and Countercl. (Dkt. 21) ¶¶ 71-76, 82-91.

118

Id. ¶¶ 77-81.

Techno-X amended its complaint on January 3, 2025.119 The operative

pleading advanced claims for breach of contract against Spartan Forge and

Thompson, and a tortious interference claim against PRADCO.120

While this litigation was pending, Spartan Forge took further steps to

consolidate its position. On February 11, it held a member meeting at which the

voting members approved resolutions purporting to amend the LLC Agreement to

confirm Thompson’s authority to negotiate with PRADCO.121 Techno-X

abstained.122 The next day, Techno-X moved for a temporary restraining order to

prevent the resolutions from being acted upon.123 I denied the motion because

PRADCO represented that it would not pursue a transaction before judicial relief

issued.124

On March 3, the parties cross-moved for partial summary judgment on certain

threshold legal issues.125

119

Verified Am. Compl. (Dkt. 24).

120

Id. ¶¶ 35-53.

121

PTO ¶ 12.

122

Id.

123

Id. ¶ 14; Pl.’s Second Mot. for a Temporary Restraining Order (Dkt. 58). 124

Order Denying Temporary Restraining Order (Dkt. 69); PTO ¶ 15.

125

See Defs.’ Opening Br. in Supp. of Mot. for Summ. J. (Dkt. 80); Pl.’s Cross-Mot. Regarding Threshold Issues of Law (Dkt. 81).

Several weeks later, on April 30, Spartan Forge purported to redeem

Techno-X’s membership interest.126

On June 9, I denied the defendants’ motion for summary judgment and largely

granted Techno-X’s cross-motion on threshold issues, holding that the binding

provisions (including the Exclusivity Provision) of the Term Sheet survived and

were not extinguished by the LLC Agreement’s integration clause, and that the

February 11 resolutions attempting to amend the LLC Agreement were

ineffective.127 Techno-X subsequently dismissed its claim against PRADCO.128

The parties agreed to bifurcate the remainder of this proceeding. Phase one

includes Techno-X’s claims for breaches of the Term Sheet and LLC Agreement

regarding exclusivity, consent rights, and information and governance rights,

alongside Spartan Forge’s counterclaim seeking a declaratory judgment validating

its involuntary termination of Techno-X’s membership.129 The phase one trial took

126

Pl.’s Mot. for Entry of Proposed Order Implementing June 9 Ruling and Restoring and Preserving Status Quo (Dkt. 131); PTO ¶ 22.

127

Letter Op. Resolving Cross-Mots. for Summ. J. (Dkt. 126) (“Summ. J. Letter Op.”). During the intervening period, I requested supplemental submissions on a Quebec choiceof-law provision in the Term Sheet and its effect on the cross-motions. See PTO ¶ 19. The parties have since agreed that there is no material difference between Quebec and Delaware law “for purposes of this case,” and have “stipulate[d] to the application of Delaware law.” PTO ¶ 21 (citing Summ. J. Letter Op. 12).

128

Notice of Dismissal (Dkt. 156); PTO ¶ 25; JX 827.

129

PTO ¶¶ 26-27.

place from April 15 to 16, 2026.130 Post-trial briefing concluded on June 24.131 I

heard post-trial oral argument on July 8, and the matter was submitted for

decision.132

The defendants’ counterclaims for breach of contract, breach of fiduciary

duty, and tortious interference will be adjudicated in the second phase.133

II. ANALYSIS

Techno-X claims that Spartan Forge breached the Term Sheet and LLC

Agreement.134 Spartan Forge, in turn, contends that it validly terminated

Techno-X’s membership under the LLC Agreement.135 The parties have the burden

of proving their respective claims by a preponderance of the evidence.136

Techno-X proved that Spartan Forge breached the Exclusivity Provision in

the Term Sheet and consent provisions in Section 8.2(a) of the LLC Agreement by

130

Judicial Action Form (Dkt. 179).

131

See Pl. and Countercl. Defs.’ Opening Post-trial Br. (Dkt. 191) (“Pl.’s Post-trial Opening Br.”); Defs. Spartan Forge LLC and Thompson’s Opening Post-trial Br. (Dkt. 190) (“Defs.’ Post-trial Opening Br.”); Pl. and Countercl. Defs.’ Answering Post-trial Br. (Dkt. 200) (“Pl.’s Post-trial Answering Br.”); Defs. Spartan Forge LLC and Thompson’s Answering Post-trial Br. (Dkt. 201) (“Defs.’ Post-trial Answering Br.”). 132

See Tr. of Post-trial Oral Arg. (Dkt. 209).

133

PTO ¶ 27.

134

Pl.’s Post-trial Opening Br. 29-56.

135

Defs.’ Post-trial Opening Br. 26-47.

136

See Revolution Retail Sys., LLC v. Sentinel Techs., Inc., 2015 WL 6611601, at *9 (Del. Ch. Oct. 30, 2015) (“Proof by a preponderance of the evidence means proof that something is more likely than not.”).

pursuing the undisclosed negotiations with PRADCO. It further proved that

Thompson committed a technical breach of Section 7.2(c) of the LLC Agreement by

failing to deliver a budget on time. Spartan Forge’s counterclaim for a declaratory

judgment validating its involuntary termination of Techno-X, however, is without

factual or legal support.

A. Techno-X’s Claims for Breach of Exclusivity and Consent Rights

Techno-X claims that Spartan Forge breached the Exclusivity Provision in the

Term Sheet and certain consent provisions in the LLC Agreement.137 To prevail on

these claims, Techno-X must prove the existence of a contract, a breach of a

contractual obligation, and resulting damages.138 I previously held that the Term

Sheet’s binding provisions remain in effect because the LLC Agreement’s

integration clause is limited to the “subject matter of the LLC Agreement,” which

governs internal management and member relations.139 At present, Spartan Forge

does not challenge the validity or enforceability of the Term Sheet or LLC

Agreement.140

137

Pl.’s Post-trial Opening Br. 30-33.

138

VLIW Tech., LLC v. Hewlett-Packard Co., 840 A.2d 606, 612 (Del. 2003). 139

Summ. J. Letter Op. 16-17 (explaining that the LLC Agreement is silent on the exclusivity and business restriction issues in the binding provisions of the Term Sheet); see LLC Agreement § 11.10; PTO ¶ 20.

140

PTO ¶¶ 48, 52.

My analysis of the relevant contractual obligations follows settled principles

of contract interpretation.141 “Delaware law adheres to the objective theory of

contracts,” which means that “a contract’s construction should be that which would

be understood by an objective, reasonable third party.”142 “When interpreting a

contract, [the] Court ‘will give priority to the parties’ intentions as reflected in the

four corners of the agreement.’”143 Where a contract is unambiguous, the court gives

effect to the “plain-meaning of the contract’s terms and provisions.”144 It must assess

the contract “as a whole and . . . give each provision and term effect, so as not to

render any part of the contract mere surplusage.”145

1. The Exclusivity Provision

In the Term Sheet’s Exclusivity Provision, Spartan Forge promised not to

solicit, initiate, or participate in discussions or negotiations concerning the sale of its

141

The LLC Agreement is governed by Delaware law. The Term Sheet is governed by Quebec law, but the parties have “stipulate[d] to the application of Delaware law” for purposes of resolving the present claims. PTO ¶ 21 (citing Summ. J. Letter Op. 12). 142

Salamone v. Gorman, 106 A.3d 354, 367-68 (Del. 2014) (quoting Osborn ex rel. Osborn v. Kemp, 991 A.2d 1153, 1159 (Del. 2010)).

143

Id. at 368 (quoting GMG Cap. Invs., LLC v. Athenian Venture P’rs I, L.P., 36 A.3d 776, 779 (Del. 2012)).

144

Osborn, 991 A.2d at 1159-60; see also Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins., 616 A.2d 1192, 1195 (Del. 1992) (“Clear and unambiguous language . . . should be given its ordinary and usual meaning.”).

145

Osborn, 991 A.2d at 1159 (quoting Kuhn Constr., Inc. v. Diamond State Port Corp., 990 A.2d 393, 396-97 (Del. 2010)).

securities or material assets without Techno-X’s authorization.146 It further agreed

not to provide services or sell products to any Vosker competitor.147 The full

Exclusivity Provision states that Spartan Forge would not:

[w]ithout the prior consent of [Techno-X], directly or indirectly:

i. solicit, initiate or participate in any discussions or negotiations

with, or encourage or respond to any inquiries or proposals by

any person or entity or enter into any agreement, other than with

[Techno-X], concerning (A) any financing of [Spartan Forge] or

(B) the issuance, sale or disposition of any securities of [Spartan

Forge] or any similar transaction, or the issuance, sale or

disposition of any material assets of [Spartan Forge]; and

ii. provide any services or sell any products to any person or

entity that is a competitor of [Techno-X’s] Business.148

Spartan Forge was bound by this provision for twelve months after the Term Sheet

took effect.149

Techno-X asserts that Spartan Forge breached the Exclusivity Provision by

engaging in negotiations with PRADCO that culminated in a proposed asset

purchase agreement.150 The evidence at trial proves it right. From the initial

LinkedIn messages to subsequent calls and communications throughout the summer

of 2024, Thompson “participate[d] in . . . discussions” with PRADCO—a

146

Term Sheet 4; see also id. at 5 (defining Techno-X’s “Business” as the “business listed in Schedule A of the Exclusive Data License Agreement”).

147

Term Sheet 4.

148

Id. (emphasis added).

149

Id.

150

Pl.’s Post-trial Opening Br. 29.

competitor of Vosker—regarding the “sale or disposition of [Spartan Forge]

assets.”151 PRADCO’s transmission of term sheets in August, a letter of intent on

October 29, and a final draft purchase agreement on December 3 confirms the extent

of Spartan Forge’s participation in negotiations regarding a prohibited sale.152 These

actions breached the Exclusivity Provision.

Spartan Forge insists that it did not breach the Term Sheet because Angers

“gave consent” after Thompson disclosed his initial outreach from Moultrie.153 The

record shows otherwise. Angers never consented to Thompson having substantive

discussions—much less acquisition negotiations—with a Vosker competitor.154 He

suggested only that Thompson connect with Moultrie’s Wilson to gather information

but cautioned Thompson not to “say to[o] much.”155 Thompson acknowledged those

limits.156 At trial, Thompson conceded that he did not understand Angers to have

given Spartan Forge consent to discuss a transaction with PRADCO.157 Techno-X

151

Term Sheet 4; see Thompson Tr. 604-06, 635; see supra Section I.D.

152

See Term Sheet 4; JX 423; JX 569; JX 620; JX 621; see supra Section I.D. 153

Defs.’ Post-trial Answering Br. 16 (citing JX 367; JX 417).

154

JX 479; Angers Tr. 104-06 (“I said, ‘You can take the call . . . .’ Again, talking about this quick call that will last a few minutes.”).

155

JX 417 at ‘0786.

156

Id.; Angers Tr. 105.

157

Thompson Tr. 629-31 (Q: “Jimmy Angers never consented to you or anyone else at Spartan Forge for Spartan Forge to have a discussion with PRADCO or Moultrie about a transaction, did he?” A: “No.”).

was left in the dark until December 17, when Spartan Forge first revealed the

PRADCO transaction at a Board meeting.158

2. The Consent Rights

Section 8.2 of the LLC Agreement subjects specified “Major Decisions” to

collective approval requirements and, for the decisions enumerated in Section 8.2(b),

Techno-X’s individual consent.159 Relevant here, Section 8.2(a)(v) required

approval of the Spartan Forge Board and a “Majority in Interest of the Members”

before making “[a]ny decision to enter into or negotiate any strategic partnership

with any Person regarding the Company’s software or outdoor hunting

application.”160 Section 8.2(a)(xi) likewise required Board and majority-member

approval before “enter[ing] into or negotiat[ing] an agreement with a Person whose

business, in whole or in part, relates to designing or distributing cellular remote area

monitoring devices and solutions for remote area monitoring.”161

158

See Belser Tr. 572 (acknowledging that Spartan Forge first alerted Techno-X to the PRADCO transaction on December 17).

159

LLC Agreement § 8.2.

160

Id. § 8.2(a)(v). There are two Sections 8.2(a)(v). The quoted text is the second such section. “Majority in Interest of the Members” is defined as “Members holding more than fifty percent (50%) of the total number of Units issued by the Company to the Members (on an as-converted basis, assuming that all Series A Preferred Units held by the Members have been converted into Common Units pursuant to Section 4.8 on the date of calculation).” Id. § 1.

161

Id. § 8.2(a)(xi). “Person” means “any individual, corporation, partnership, joint venture, . . . limited liability company, . . . or any other legal entity.” Id. § 1.

The PRADCO transaction fell squarely within these provisions. By proposing

to combine Spartan Forge’s mapping technology with PRADCO’s competing

Moultrie hardware system, the transaction triggered Section 8.2(a)(v).162 Section

8.2(a)(xi) was also implicated because Moultrie fell within the provision’s definition

of a covered counterparty.163 As Thompson conceded at trial, much of the proposed

PRADCO transaction overlapped with the integration that Vosker had been pursuing

with Spartan Forge.164 Spartan Forge did not obtain the consent of its Board or

Majority in Interest of the Members before “enter[ing] into or negotiat[ing]” the

PRADCO transaction.165

Techno-X also asserts that Spartan Forge breached Section 8.2(b), but it failed

to prove this claim. Section 8.2(b)(iv) requires Techno-X’s individual consent for

“[a]ny transaction by [Spartan Forge] to merge or consolidate with another person

or entity.”166 The proposed PRADCO transaction was an asset sale, not a merger or

consolidation. Where the drafters intended to capture an asset sale, they did so

162

See JX 423 (PRADCO describing “technical integration” with Moultrie as the “ultimate goal” of the transaction with Spartan Forge and a “critical element of the deal”); JX 464 (describing the goal as “accelerat[ing] the buildout of an app platform with truly unique capabilities for hunt planning,” so as to “combin[e]” Spartan Forge’s “strengths in mapping” with PRADCO’s “hardware ecosystem”); LLC Agreement § 8.2(a)(v); see also JX 465; JX 541; JX 569.

163

Angers Tr. 100-01; LLC Agreement § 8.2(a)(xi).

164

Thompson Tr. 659.

165

LLC Agreement § 8.2(a).

166

Id. § 8.2(b)(iv).

expressly—defining a “Sale of the Company” in Section 1 to include a disposition

“of all or substantially all of the assets” and addressing it under the drag-along

provisions of Section 9.5(e) rather than Section 8.2.167 Techno-X’s reliance on

Section 8.2(b)(i), which requires its consent for “[a]ny material change in the

Company Business,” is similarly unavailing.168 “Company Business” means “the

business of developing and commercializing technology for the outdoor activities

market including but not limited to hunting, scouting, mapping, machine learning,

predictive analytics, media processing, and weather forecasting.”169 The record does

not establish that the PRADCO transaction would have altered the nature of Spartan

Forge’s core business of developing and commercializing outdoor mapping and

predictive technology.

Spartan Forge advances several defenses to Techno-X’s claim that it breached

the consent provisions in the LLC Agreement. None has merit.

First, Spartan Forge asserts that it did not breach the consent provisions

because the PRADCO “transaction was never fully negotiated and was not, and still

167

Id. § 1; see id. § 9.5(e); see also Williams Cos., Inc. v. Energy Transfer LP, 2020 WL 3581095, at *12 n.123 (Del. Ch. July 2, 2020) (“[T]he use of different language in different sections of a contract suggests the difference is intentional—i.e., the parties intended for the sections to have different meaning.”).

168

LLC Agreement § 8.2(b)(i).

169

Id. § 1.

has not been, undertaken without Techno-X’s consent.”170 This argument is

divorced from the contractual text. Section 8.2(a) required Board and majoritymember consent before making “[a]ny decision to enter into or negotiate” strategic

partnerships or other transactions with a competitor.171 This language does not limit

Spartan Forge’s obligations to finalized transactions.

Next, Spartan Forge argues that Techno-X ratified, waived, or acquiesced to

the transaction.172 It did not meet its burden of proving these affirmative defenses.173

The affirmative defenses of waiver and acquiescence require the plaintiff to

have had full knowledge of the material facts.174 Techno-X did not have full—or

any—knowledge of the PRADCO transaction while it was being negotiated.175

Thompson merely told Angers about the initial LinkedIn outreach and asked to speak

170

PTO ¶ 93 (discussing breach of the Term Sheet); id. ¶ 95 (same but for the LLC Agreement).

171

LLC Agreement § 8.2(a)(v), (xi) (emphasis added).

172

PTO ¶ 97 (arguing that Angers “never so much as requested that Spartan Forge terminate negotiations with PRADCO,” that “Techno-X through Angers ratified and acquiesced to th[e] negotiations,” and that Techno-X “waived any veto right”). 173

Medek v. Medek, 2008 WL 4261017, at *10 (Del. Ch. Sept. 10, 2008).

174

Klaassen v. Allegro Dev. Corp., 106 A.3d 1035, 1047-48 (Del. 2014) (explaining that a “claimant is deemed to have acquiesced” where he “has full knowledge of his rights and the material facts” (citation omitted)); In re Coinmint, LLC, 261 A.3d 867, 893 (Del. Ch. 2021) (stating that waiver “implies knowledge of all material facts and an intent to waive, together with a willingness to refrain from enforcing those contractual rights”). 175

Thompson Tr. 630.

with Angers “about [the PRADCO] discussion.”176 Angers contemporaneously

confirmed that he had not authorized further negotiations, telling Laaboudi, “I didn't

give any green light.”177

After Angers directed Thompson to connect with Laaboudi, Thompson sent

vague screenshots of communications—none of which revealed the substance of his

negotiations.178 Thompson did not disclose that Spartan Forge had received letters

of intent, diligence requests, and a draft asset purchase agreement from PRADCO.179

Techno-X was kept in the dark until the December 17 Board meeting, when

Thompson first revealed the PRADCO transaction as an “imminent” deal with

completed due diligence.180 Spartan Forge also concealed the topic of that meeting

by omitting an agenda from the Board notice, in stark contrast to the notice it

circulated days later for a December 20 meeting.181

176

See JX 427; JX 434; Thompson Tr. 632.

177

JX 479 at 10.

178

See JX 37 at 54 (Laaboudi: “Can u plz send me the Moultrie communication / invitation you received ?” Thompson: “He text me I can send a screen shot. Otherwise it’s been phone calls.”); JX 40 (text from “EBSCO” (the parent-affiliate of PRADCO) saying “Do you have a few minutes to connect any time tomorrow morning?”).

179

Thompson Tr. 630 (Q: “You never sent Mr. Angers or Mr. Laaboudi[] . . . an email or text that advised them that you and Spartan Forge had received a draft proposal or a draft agreement from PRADCO or Moultrie, did you?” A: “No.”); see id. at 630-41. 180

Angers Tr. 179-80; Belser Tr. 565, 572 (explaining that he never raised the PRADCO transaction with Techno-X before the December 17 board meeting).

181

Compare JX 677 (December 13 notice with no agenda), with JX 738 (December 20 notice enclosing an agenda).

Nor did Techno-X ratify the transaction ex post.182 Like waiver and

acquiescence, “to find that a party ratified a prior act, it is first necessary to find that

the ratifying party had ‘[k]nowledge, actual or imputed, of all material facts.’” 183

Techno-X’s conduct after it learned of the PRADCO transaction vitiates Spartan

Forge’s argument. One day after the December 17 Board meeting, Techno-X sent a

written objection to the proposed transaction.184 It also filed this lawsuit and sought

emergency injunctive relief to enjoin the transaction from closing.185 Techno-X

“acted consistently with [its] position” that the PRADCO transaction violated

Spartan Forge’s contractual commitments.186

Finally, Spartan Forge raises defenses based on its governance structure. It

contends that its Managing Member—Thompson—had the unilateral authority to

pursue the PRADCO transaction under Section 8.1(a) of the LLC Agreement.187

This ignores the plain text of Section 8.1(a), which subjects the Managing Member’s

182

See TR Invs., LLC v. Genger, 2010 WL 2901704, at *15 (Del. Ch. July 23, 2010) (“Ratification differs [from acquiescence] primarily in timing: [ac]quiescence properly speaks of assent by words or conduct during the progress of a transaction, while ratification suggests an assent after the fact.” (citation omitted)).

183

Id. (citing Frank v. Wilson & Co., 32 A.2d 277, 283 (Del. 1943)).

184

JX 768.

185

See supra Section I.H.

186

Genger v. TR Invs., LLC, 26 A.3d 180, 196 (Del. 2011).

187

See Defs.’ Post-trial Opening Br. 31; Defs.’ Post-trial Answering Br. 20-21; see also LLC Agreement § 8.1(a); PTO ¶¶ 98-99, 119.

authority to the “Major Decisions” requirements of Section 8.2.188 Spartan Forge

further contends that its Board was merely “advisory” and lacked the power to

conduct the company’s affairs.189 But Section 8.4 formally establishes the Board,

and Section 8.2 grants it affirmative consent rights.190 Adopting Spartan Forge’s

interpretation would render these provisions meaningless.

B. Techno-X’s Claims for Breach of Information and

Governance Rights

Techno-X next claims that Spartan Forge breached certain information and

governance provisions in the LLC Agreement: Sections 8.4, 7.2, and 9.9.191 In the

Pre-trial Order, Spartan Forge maintained that Techno-X lacked standing to pursue

claims premised on Angers’s directorial rights.192 It abandoned that defense in its

post-trial briefing.193 Instead, it argues that Techno-X’s claims are waived or fail on

the merits.194

188

LLC Agreement § 8.1(a) (“Subject to Section 8.2, the Managing Member shall have the right, power and authority to manage, operate and control the business and affairs of the Company and to do or cause to be done any and all acts, at the expense of the Company, deemed by the Managing Member to be necessary or appropriate to effectuate the purposes of the Company.”).

189

See Defs.’ Post-trial Answering Br. 1, 20-21.

190

See LLC Agreement §§ 8.2, 8.4.

191

See Pl.’s Post-trial Opening Br. 39-41; PTO ¶¶ 82-83.

192

See PTO ¶ 118.

193

See Emerald P’rs v. Berlin, 726 A.2d 1215, 1224 (Del. 1999) (“Issues not briefed are deemed waived.”).

194

See Defs.’ Post-trial Answering Br. 13-15.

To start, Techno-X argues that Spartan Forge breached Section 8.4 because it

did not hold a noticed Board meeting, Board vote, or obtain a unanimous written

consent before negotiating the PRADCO transaction.195 This theory is redundant of

Techno-X’s claim for breach of Section 8.2. As explained above, Spartan Forge

substantively breached Section 8.2(a) by failing to obtain the Board’s consent before

pursuing the transaction.196 How the Board should have formally obtained or

memorialized that consent under Section 8.4 is superfluous. I therefore decline to

find an independent breach of Section 8.4.

Techno-X next argues that Thompson breached Section 7.2(c) of the LLC

Agreement.197 Section 7.2(c) requires the Managing Member to “prepare and submit

to the Board for approval” an annual operating budget “not later than 3 months prior

to the beginning of each fiscal year beginning January 1, 2025.” 198 Under this

provision, the 2025 budget was due to the Board by October 1, 2024. But Thompson

195

See Pl.’s Post-trial Opening Br. 39; LLC Agreement § 8.4(d) (“The acts of a majority of the Directors present and voting at a meeting of the Board at which a quorum is present shall constitute the acts of the Board.”); id. § 8.4(f) (requiring the transmission of a notice to each director “not less than two (2) [b]usiness [d]ays nor more than thirty (30) days before the date of the meeting”); id. § 8.4(g) (permitting the Board to act by written consent).

196

See supra Section II.A.2.

197

Pl.’s Post-trial Opening Br. 39-40; see LLC Agreement § 7.2(c). Earlier in the litigation, Techno-X also claimed that other information rights provisions in addition to Section 7.2(c) had been breached. See, e.g., PTO ¶¶ 82-83. It did not press these claims after trial, thereby waiving them. See Emerald P’rs, 726 A.2d at 1224.

198

LLC Agreement § 7.2(c).

withheld the 2025 budget until April 2025, when he provided the budget just eight

minutes before a noticed Board meeting was to begin.199 Although this delay

breached Section 7.2(c), Techno-X has not demonstrated that it suffered cognizable

harm as a result.200 In addition to the remedy addressed below, Techno-X is entitled

to $1.00 for Thompson’s breach of Section 7.2(c).201

Finally, Techno-X claims that Spartan Forge breached Section 9.9, which

required Techno-X and Spartan Forge to hold quarterly Alignment Meetings “[f]or

the first twenty-four (24) months” after execution of the LLC Agreement.202 At the

Alignment Meeting, attendees were to discuss Spartan Forge’s “financial statements,

budget, Board meeting agenda, and quarterly strategic vision.”203 Techno-X

suggests that Spartan Forge breached Section 9.9 by failing to provide materials in

advance of the meeting.204 But Section 9.9 lacks language concerning the materials

to be provided before or during the meeting. It only requires that the meeting be

held and outlines the topics to be discussed. Techno-X therefore did not prove a

breach of this provision.

199

JX 799; JX 801.

200

See, e.g., Symbiont.io, Inc. v. Ipreo Hldgs., LLC, 2021 WL 3575709, at *46 (Del. Ch. Aug. 13, 2021) (awarding nominal damages for the technical breach of an operating plan). 201

See infra Section III.

202

LLC Agreement § 9.9.

203

Id.

204

See Pl.’s Post-trial Opening Br. 39-40; Pl.’s Post-trial Answering Br. 47.

* * *

Techno-X has proven that Spartan Forge breached the Exclusivity Provision

in the Term Sheet and the consent rights in Sections 8.2(a)(v) and (xi) of the LLC

Agreement. Remedies for these breaches are addressed below.205 Techno-X has

also proven that Thompson breached Section 7.2(c) of the LLC Agreement, for

which it is awarded nominal damages. It has failed to prove its claims for breach of

Sections 8.2(b), 8.4, and 9.9 of the LLC Agreement.

C. Spartan Forge’s Counterclaim for a Declaratory Judgment

Spartan Forge seeks a declaration that it had the right to involuntarily

terminate Techno-X’s membership interest under the LLC Agreement.206 The

counterclaim concerns Section 9.6, which permits Spartan Forge—“in its sole and

absolute discretion”—to repurchase a member’s units upon a “Withdrawal

Event.”207 Section 9.6(b) defines “Withdrawal Event” to include an “Involuntary

Termination,” which occurs where a member, among other things, “materially

breaches” the LLC Agreement and fails to cure within 10 days of written notice or

“causes material harm” to Spartan Forge’s reputation or “financial prospects.”208

205

See infra Section III.

206

See Defs.’ Post-trial Opening Br. 31-32, 35; 10 Del. C. § 6501.

207

LLC Agreement § 9.6(a).

208

Id. §§ 9.6(b)(ix)(c), (e).

Spartan Forge’s November 20, 2024 notice of involuntary termination

asserted that both Involuntary Termination events occurred.209 It stated that TechnoX materially breached the LLC Agreement in connection with the Alignment

Meeting:

After repeated requests for [Techno-X] to schedule an alignment

meeting, [Techno-X] finally agreed to hold a meeting on

November 7, 2024, but did not allot sufficient time to address all

of the required items for a complete meeting (none of the budget,

Board meeting agenda or quarterly strategic vision were

discussed or approved) and thus did not cure its breach of the

[LLC] Agreement.210

The notice also stated that Techno-X had “taken numerous actions and omitted to

take numerous actions that have caused material harm to [Spartan Forge’s] financial

prospects in breach of the [LLC Agreement].”211 To substantiate these assertions,

Spartan Forge relies on internal Vosker communications produced during the

litigation.212

Spartan Forge did not prevail on its counterclaim. Its termination of

Techno-X was pretextual. Thompson and Belser devised a plan to induce Techno-X

to breach the LLC Agreement so that Spartan Forge could terminate its membership

209

JX 606; JX 607.

210

JX 607.

211

Id.

212

Defs.’ Post-trial Opening Br. 41.

and pursue a transaction with PRADCO.213 Setting aside the inequity of this

conduct, it failed to prove that a Withdrawal Event occurred.214

1. The Alignment Meeting Obligation

Spartan Forge first claims that Techno-X materially breached the LLC

Agreement by failing to complete the agenda at the November 7 Alignment

Meeting.215 As a threshold matter, the incomplete agenda did not constitute a

material breach on this record. The parties held the meeting, addressed financial

matters, and had an opportunity to continue their discussion on the additional dates

Techno-X proposed. Spartan Forge has not shown that the unfinished agenda

deprived it of a benefit fundamental to the parties’ agreement.216

213

See JX 555; Belser Tr. 566-67.

214

Because Spartan Forge’s counterclaim fails on the merits, I need not address TechnoX’s defenses. See PTO ¶ 131 (asserting that the counterclaim “is barred in whole or in part by, inter alia, their own prior breach of contract and by breaching their duty of good faith and fair dealing”).

215

Defs.’ Post-trial Opening Br. 31-32.

216

See generally 2009 Caiola Family Tr. v. PWA, LLC, 2015 WL 6007596, at *18 (Del. Ch. Oct. 14, 2015) (defining a breach as “material” if it goes “to the root or essence of the agreement between the parties” or “touches the fundamental purpose of the contract”); BioLife Sol’ns, Inc. v. Endocare, Inc., 838 A.2d 268, 278 (Del. Ch. Oct. 1, 2003) (discussing when a party is in material breach of a contract as opposed to “a slight breach” (citation omitted)); see Restatement (Second) of Contracts § 241 (outlining factors to consider when determining whether “a failure to render performance . . . is material,” including “the extent to which the injured party will be deprived of the benefit which he reasonably expected”).

But even assuming the deficiency were material, the claim fails on the merits.

Techno-X cured any purported deficiency by scheduling an Alignment Meeting

within the notice period, and Spartan Forge’s own obstruction prevented further

compliance. A party may cure a breached obligation to hold a meeting when it

“agree[s] to a [meeting] . . . within the cure period.”217

On October 28, Techno-X received Spartan Forge’s notice that Techno-X was

required to schedule a quarterly Alignment Meeting “to avoid breach of” the LLC

Agreement.218 Vosker’s legal counsel, acting for Techno-X, promptly responded by

proposing meeting dates.219 The parties then held the Alignment Meeting on

November 7.220 These actions satisfied Techno-X’s obligation to cure any

scheduling deficiency within ten days of receiving notice.221

After the attendees were unable to cover all the topics contemplated by

Section 9.9 of the LLC Agreement, Techno-X proposed four additional dates “to

217

Lola Cars Int’l Ltd. v. Krohn Racing, LLC, 2010 WL 3314484, at *18 n.222 (Del. Ch. Aug. 2, 2010) (holding that the absence of formal board meetings did not establish a material breach where the parties’ communications supplied the expected benefits and the alleged breaching party agreed to hold a formal meeting within the contractual cure period). 218

JX 567 at ‘1069, ‘1073; PTO ¶ 59.

219

PTO ¶ 59.

220

Id. ¶ 63.

221

LLC Agreement § 9.6(b)(ix)(c).

continue [the] discussion and finalize the last two items o[n] the agenda.”222 Spartan

Forge did not respond. Instead, it sent a notice on November 20 asserting that

Techno-X had breached the LLC Agreement by failing to “allot sufficient time to

address all of the required items.”223

“Delaware courts follow the principle that a party who wrongfully prevents a

thing from being done cannot avail itself of the nonperformance it has

occasioned.”224 The record overwhelmingly demonstrates that the defendants’

unresponsiveness was deliberate.225 In fact, Belser’s “Declaration of Independence”

documented the strategy to “delay everything” to fabricate an uncured default.226

Because Spartan Forge prevented Techno-X from satisfying the parties’ joint

222

JX 588; see JX 593; PTO ¶ 65; see also LLC Agreement § 9.9 (requiring the parties to engage in “a review, discussion and approval of [Spartan Forge’s] financial statements, budget, Board meeting agenda, and quarterly strategic vision”).

223

JX 607; see JX 615.

224

W & G Seaford Assocs. v. E. Shore Mkts., Inc., 714 F. Supp. 1336, 1341 (D. Del. 1989) (describing the “cardinal principle of contract law regarding conditions” (citing Restatement (Second) of Contracts § 245 (1981))); see also De Los Santos v. Allstate Prop. & Cas. Ins. Co., 2025 WL 2092402, at *5 n.54, 345 A.3d 959 (Del. 2025) (TABLE) (explaining that the prevention doctrine “is based on the long-established principle of law that a party should not be able to take advantage of its own wrongful act”). 225

On September 3, Laaboudi proposed that an Alignment Meeting be held on October 10. JX 483; JX 492. The defendants ignored his request. JX 493. When Laaboudi asked again on October 3, the defendants deflected. JX 412 at 4. After Laaboudi followed up once more, the defendants responded only that they were “generally available” in October or November. JX 549. On October 16, the defendants demanded that Techno-X schedule an Alignment Meeting “to avoid breaching the contract.” Id. Laaboudi proposed two meeting dates the following week. JX 412 at 5-6. The defendants again delayed. JX 412 at 6. 226

JX 555; Belser Tr. 566-67.

obligation concerning Alignment Meetings under the LLC Agreement, Spartan

Forge cannot exploit the resulting non-performance.

2. Alleged Failure to Market and Integrate

Next, Spartan Forge claims that Techno-X caused “material harm” to Spartan

Forge’s “reputation or its financial prospects” by failing to implement marketing

campaigns and integration of the products.227 “Material harm” is undefined in the

LLC Agreement.228 Black’s Law Dictionary defines the phrase as “[h]arm in the

form of financial loss, reputational damage, significant embarrassment, emotional

distress, chilling of a constitutionally protected activity, or unwanted disclosure of

personal data.”229 The defendants put forward insufficient evidence that Techno-X

caused any such harm to Spartan Forge.230

227

LLC Agreement § 9.6(b)(ix)(e); Defs.’ Post-trial Opening Br. 33-36.

228

See generally LLC Agreement.

229

Harm, Black’s Law Dictionary (12th ed. 2024); see Material Harm, Black’s Law Dictionary (12th ed. 2024) (linking to the definition of “material harm” in “harm”); see also ShiftKey Parent, LLC v. Nelson, 2025 WL 548420, at *12 (Del. Super. Jan. 31, 2025) (looking to Black’s Law Dictionary’s definition of “material harm” where the relevant contract is silent as to the term’s meaning); Lorillard Tobacco Co. v. Am. Legacy Found., 903 A.2d 728, 738 (Del. 2006) (“Under well-settled case law, Delaware courts look to dictionaries for assistance in determining the plain meaning of terms which are not defined in a contract.”).

230

The defendants rely solely on Belser’s testimony that Vosker’s actions had a detrimental effect on Spartan Forge’s business. See Defs.’ Post-trial Opening Br. 33-36 (citing Belser’s testimony); see also Thompson Tr. 597 (claiming that Techno-X’s actions caused Spartan Forge to have a “particularly bad” 2023). But the record shows that Vosker helped keep Spartan Forge afloat by accelerating payments and prepaying for services that were never performed. See Angers Tr. 85-87, 157-58; Thompson Tr. 648-49.

Spartan Forge alleges material harm from Vosker’s purported broken promise

to provide marketing support and “slow-walking” of technical integration.231 But

Vosker only offered to provide marketing support and complete technical integration

after a services agreement was finalized. Section 9.8 contemplated a services

agreement between Techno-X, as Investor, and Spartan Forge, as the Company,

addressing integration of their “technology stacks” within 60 days of the LLC

Agreement’s execution.232

The June 2024 meeting in Quebec, where the parties discussed the broad

contours of a marketing plan and integration, was the first step toward that goal.233

Vosker then participated in weekly integration meetings while the commercial terms

of the services agreement were negotiated.234 Throughout these discussions, Angers

took the reasonable position that a finalized services agreement was a prerequisite

to integration and marketing support so that revenue and commission splits, among

other commercial terms, were settled.235 Drafts of the services agreement confirm

231

Defs.’ Post-trial Opening Br. 33-36.

232

See LLC Agreement § 9.8 (describing the integration through a “to-be-determined business model”).

233

See PTO ¶¶ 54, 56; supra Section I.C.

234

Angers Tr. 106-07, 111-12; Rousseau Tr. 473-75.

235

See Angers Tr. 108-12 (testifying that all discussions about technical integration and marketing were “in the spirit” of having a finalized services agreement); see also Laaboudi Tr. 350-51; Belser Tr. 559.

this premise.236 The services agreement never came to fruition because Spartan

Forge delayed, diverting its focus to pursue negotiations with PRADCO.

3. After-Acquired Evidence

Finally, the defendants cite communications produced during discovery to

support an Involuntary Termination.237 “A party who terminates a counterparty on

specific grounds can defend the termination decision on alternative grounds if the

party can satisfy the after-acquired-evidence doctrine.”238 “Under that doctrine, the

party must have learned about the justification after the termination, and the

justification must independently support termination.”239 Even if the doctrine

applies in this context, it does not aid Spartan Forge.

Spartan Forge invokes internal communications to argue that Vosker planned

to “kill” the business and acquire it cheaply.240 It claims that, had it known of these

goals earlier, it would have “immediately” terminated Techno-X’s membership.241

236

JX 545 § 5.1 (describing a “Revenue Share Structure” following “Advertising Event[s]”); id. §§ 5.2.1, 5.2.2 (bifurcating “Vosker’s Responsibilities” and “Spartan’s Responsibilities”); JX 533 §§ 5.1, 5.2.1, 5.2.2 (same). The same is true for the draft “Heads of Services Agreement,” which was intended to “facilitate the negotiation of the Services Agreement.” JX 502; JX 510; JX 512 (proposing “Integration” and “Marketing” plans). 237

See Defs.’ Post-trial Opening Br. 37 & n.13; Defs.’ Post-trial Answering Br. 25, 27-29. 238

PJT Hldgs., LLC v. Costanzo, 339 A.3d 1231, 1260 (Del. Ch. 2025).

239

Id.

240

Defs.’ Post-trial Opening Br. 40-41 (citing JX 348, JX 85, JX 139, and JX 407). 241

Id. at 37-38.

The cited communications reflect contingency planning for worst-case scenarios;

none constitute an actionable breach of contract.242 They do not establish an uncured

material breach by Techno-X or material harm caused by Techno-X to Spartan

Forge’s reputation or financial prospects.243

Spartan Forge’s post hoc justification is contrived. In his Declaration of

Independence, Belser outlined a plan to “shed Vosker as an investor and sell”

Spartan Forge.244 He and Thompson plotted to catch Techno-X in a breach of the

LLC Agreement to bring their plan to fruition.245

Having failed in that effort, Spartan Forge now attempts to use the litigation

record to rationalize the termination of Techno-X’s membership.246 Although a

different contemporaneous reason for termination does not necessarily foreclose

reliance on after-acquired evidence, the later-discovered conduct must

242

See JX 85; Angers Tr. 33-36 (credibly testifying that in JX 85, he was referring to “what is the best case and what is the worst case” scenario).

243

See, e.g., Tatum v. Fairstead Affordable LLC, 347 A.3d 1221, 1265-66 (Del. Ch. 2025) (finding that an employee’s plans to start a competing business did not breach his best efforts or no-conflict contractual obligations because he continued to perform); Energy Transfer, LP v. Williams Cos., Inc., 346 A.3d 1089, 1110 (Del. 2023) (rejecting a plaintiff’s sabotage theory premised upon internal communications because the defendant never took actions in accordance with that theory or to otherwise undercut the deal). 244

JX 555; see Belser Tr. 566-67.

245

See JX 555; Belser Tr. 543.

246

Costanzo, 339 A.3d at 1261 n.153 (“[When] [a] party . . . hokes up a phony defense to the performance of his contractual duties and then when that defense fails . . . tries on another defense for size[,] [he] can properly be said to be acting in bad faith.” (citing Harbor Ins. v. Cont’l Bank Corp., 922 F.2d 357, 363 (7th Cir. 1990))).

independently satisfy a contractual ground for termination.247 Spartan Forge has not

established such conduct here. The doctrine does not license a party “to retroactively

invent grounds for termination” to clear the way for an unauthorized transaction.248

Spartan Forge’s counterclaim is unsuccessful.249

III. REMEDY

Having found that Spartan Forge breached the Term Sheet and the LLC

Agreement and that Thompson breached Section 7.2(c) of the LLC Agreement, and

having rejected Spartan Forge’s counterclaim for declaratory relief, I turn to the

appropriate remedy. Techno-X seeks a range of equitable and declaratory relief,

including an order setting aside its Involuntary Termination, restoration of its

membership and governance rights, an extension of the Term Sheet exclusivity

period, a permanent injunction barring future unauthorized Major Decisions, and fee

247

Id. at 1260 (requiring that a justification discovered after termination independently support termination); see also Fortis Advs., LLC v. Krafton, 354 A.3d 906, 942 (Del. Ch. 2026).

248

Krafton, 354 A.3d at 942; see also A&J Cap., Inc. v. Law Office of Krug, 2019 WL 367176, at *11 n.128 (Del. Ch. Jan. 29, 2019) (declining to “circumvent the ‘for cause’ contractual predicate for which [the parties] bargained” by justifying termination “for any reason unearthed after the fact”), aff’d, 222 A.3d 143 (Del. 2019).

249

Spartan Forge repackages the same “sabotage” narrative into affirmative defenses of prior material breach and unclean hands. See Defs.’ Post-trial Opening Br. 47-51. Because Spartan Forge failed to prove a prior material breach that bars the relief sought in this phase, its material breach defense fails. The record also reflects that Techno-X “c[a]me into equity . . . with clean hands.” Bodley v. Jones, 59 A.2d 463, 469 (Del. 1947). These determinations do not resolve the counterclaims reserved for phase two.

shifting.250 I conclude that Techno-X is entitled to a declaration that its involuntary

termination was invalid, restoration of its membership and governance rights, and

equitable extensions of certain contractual deadlines under the LLC Agreement. I

decline to extend the Exclusivity Provision or permanently enjoin future

unauthorized Major Decisions for the reasons explained below. Finally, I decline to

shift fees.

A. Reinstatement

Because Spartan Forge lacked grounds under Section 9.6(b)(ix) of the LLC

Agreement, no Withdrawal Event occurred.251 The purported termination and

redemption therefore lacked the required contractual basis. Techno-X is entitled to

a declaration that Spartan Forge’s November 20, 2024 notice of Involuntary

Termination and its April 30, 2025 equity redemption are invalid and set aside.252

Techno-X remains a member of Spartan Forge, holding Series A Preferred Units

representing a 6% equity interest in the company.253 The LLC Agreement and the

surviving binding provisions of the Term Sheet remain enforceable according to

250

See Pl.’s Post-trial Opening Br. 55-64.

251

See LLC Agreement § 9.6(b)(ix).

252

See 10 Del. C. § 6501.

253

Cf. Lynch v. Gonzalez, 2020 WL 4381604, at *39 (Del. Ch. July 31, 2020) (issuing a declaratory judgment on the ownership of equity interests).

their terms, and Techno-X retains all attendant governance, consent, and information

rights under those agreements.254

Spartan Forge tendered a check and promissory note as consideration for the

purported redemption, but Techno-X accepted neither.255 As such, no return of

redemption consideration is necessary. The implementing order must require

Spartan Forge to cancel those instruments, conform its membership records to this

declaration, recognize Angers as Techno-X’s designated Board member, and

provide Techno-X and Angers the information to which each is entitled under the

LLC Agreement.

The defendants attempt to reframe Techno-X’s request as one for equitable

rescission.256 They contend that the April 30, 2025 redemption converted

Techno-X’s equity interest, making its sole recourse “quasi-appraisal” damages.257

I disagree that such damages are an adequate remedy for the deprivation of a

minority investor’s bargained-for rights through an invalid forced redemption.258

254

This declaration does not revive the Term Sheet’s expired Exclusivity Provision. See infra Section III.B.

255

See JX 808; JXs 810-11; Thompson Tr. 629; PTO ¶¶ 22, 130, 135.

256

Defs.’ Post-trial Opening Br. 28, 44-46; Defs.’ Post-trial Answering Br. 29-35. 257

See Defs.’ Post-trial Opening Br. 28-30, 44-46.

258

Cf. Krafton, 354 A.3d at 949-51 (explaining that equity will enforce operational control and governance rights where money damages cannot compensate for the loss of unique contract rights).

Techno-X does not seek to rescind a contract. Rather, it contends that Spartan Forge

lacked a contractual prerequisite for an Involuntary Termination.259

To ensure that Techno-X’s reinstatement is not illusory given the passage of

time during this litigation, the periods governing Techno-X’s time-sensitive rights

must be adjusted.260 The 24-month period for quarterly Alignment Meetings under

Section 9.9 of the LLC Agreement is equitably extended by 694 days—the duration

between the invalid November 20, 2024 termination notice and the date of this

decision.261

To preserve Techno-X’s acquisition rights, the services agreement

prerequisite in Section 9.8 of the LLC Agreement must also be addressed. The

259

The defendants’ related contention that laches bars Techno-X’s reinstatement also fails. See Defs.’ Post-trial Opening Br. 45-46; Defs.’ Post-trial Answering Br. 34-35. Laches requires an “unreasonable delay” by the plaintiff in bringing a claim that results in “material prejudice to the defendant.” Reid v. Spazio, 970 A.2d 176, 182-83 (Del. 2009). Neither element is present here. The validity of the November 20, 2024 notice of Involuntary Termination—the sole predicate for the April 30, 2025 redemption—was already before the court when Spartan Forge purported to redeem Techno-X’s units. Techno-X rejected the redemption consideration and promptly moved to preserve the status quo. See PTO ¶¶ 22, 130; Pl.’s Mot. for Entry of Order Implementing the Court’s June 9 Ruling and Restoring and Preserving Status Quo (Dkt. 131). Spartan Forge cannot claim prejudice from an improper redemption it chose to execute while the validity of the underlying termination was being litigated.

260

Cf. Krafton, 354 A.3d at 952-53 (equitably extending an earnout period by the duration of a party’s wrongful ouster to ensure relief was not illusory); Tri State Mall Assocs. v. A.A.R. Realty Corp., 298 A.2d 368, 371-72 (Del. Ch. 1972) (“[T]he Court in decreeing specific performance will adjust the equities of the parties in such a manner as to put them as nearly as possible in the same position as if the contract had been performed [a]ccording to its terms.”).

261

See LLC Agreement § 9.9.

purchase rights were predicated on executing a services agreement by a deadline

extended to October 31, 2024.262 The parties had resolved all outstanding issues in

negotiating a services agreement by October 29, but Thompson withheld his

signature to pursue the PRADCO transaction.263

Spartan Forge’s breaches thus materially contributed to the failure to complete

the services agreement within the agreed period.264 The deadline to execute the

services agreement is equitably extended to 60 days after entry of the order

implementing this decision. The twelve-month period for exercising the “Majority

Right to Purchase” and the twenty-four-month period preceding the “External

Valuation” process in Section 9.8 are each extended by 694 days.265 Both purchase

rights remain conditioned on execution of a services agreement within the extended

deadline. All other timing provisions in Section 9.8 are unchanged.

262

Id. § 9.8; PTO ¶ 57.

263

PTO ¶ 61; see supra Sections I.C-D.

264

See WaveDivision Hldgs., LLC v. Millennium Digit. Media Sys., L.L.C., 2010 WL 3706624, at *14 (Del. Ch. Sept. 17, 2010) (explaining that a party cannot rely on the failure of a contractual condition where its breach materially contributed to that failure). 265

See supra note 261 and accompanying text; LLC Agreement § 9.8.

B. Exclusivity and Injunctive Relief

Techno-X also requests a permanent injunction prohibiting Spartan Forge and

Thompson from transacting with competitors, alongside a 24-month extension of the

Term Sheet exclusivity period.266

First, I decline to grant a new 24-month exclusivity period. The Term Sheet

provided for 12 months of exclusivity, expiring in March 2025.267 Spartan Forge’s

improper negotiations with PRADCO occurred during that period, and PRADCO

withdrew from the proposed transaction when this litigation began.268 Though those

negotiations breached the Exclusivity Provision, they do not by themselves entitle

Techno-X to restart or enlarge the agreed-upon restriction.

Techno-X has not proven that Spartan Forge engaged in additional prohibited

negotiations after PRADCO withdrew. Considering that Techno-X’s governance

rights and acquisition opportunity are restored, Techno-X has not shown that an

additional exclusivity period is necessary to remedy Spartan Forge’s breaches. A

new two-year restriction would expand, rather than restore, the parties’ bargain.269

266

See Pl.’s Post-trial Opening Br. 55-60.

267

Term Sheet 4.

268

See supra Sections I.D, I.H.

269

Cf. Kan-Di-Ki, LLC v. Suer, 2015 WL 4503210, at *28 (Del. Ch. July 22, 2015) (limiting an injunction to the period reasonably necessary to restore the plaintiff’s bargained-for protection, considering the timing and extent of the defendant’s breaches).

Second, the requested permanent injunction barring the defendants from

soliciting, discussing, negotiating, or agreeing to a transaction with PRADCO is

overbroad. Confirmation of Techno-X’s rights under the LLC Agreement restores

its bargained-for participation in Spartan Forge’s governance.270 Sections 8.2(a)(v)

and (xi), which Techno-X proved were breached, require advance approval of the

Board and a Majority in Interest of the Members before Spartan Forge enters into or

negotiates the covered transactions.271

Unlike Section 8.2(b), the breached provisions do not require Techno-X’s

individual consent. Rather, Techno-X holds a 6% equity interest and designates one

of three Board members. An injunction categorically prohibiting those transactions,

even if the required consents were obtained, would effectively give Techno-X a

blocking right that Sections 8.2(a)(v) and (xi) do not provide.

To the extent Techno-X seeks a narrower injunction requiring compliance

with Section 8.2’s approval procedures, I also decline to grant that relief.272 This

decision declares that Techno-X’s membership and attendant governance rights

remain effective, notwithstanding the purported termination and redemption. It also

confirms that Spartan Forge must obtain the consents required by Sections 8.2(a)(v)

270

See LLC Agreement §§ 8.2(a)(v), (xi).

271

Id.

272

See Pl.’s Post-trial Opening Br. 60; PTO ¶ 134.

and (xi) before entering into or negotiating covered transactions. The declaratory

relief resolves the parties’ dispute over the continued effectiveness and scope of

those requirements.273 In these circumstances, declaratory relief adequately protects

Techno-X’s contractual rights and an additional injunction is unnecessary.

C. Fee-Shifting

Finally, Techno-X requests an award of reasonable attorneys’ fees and

expenses.274 “Under the American Rule, absent express statutory language to the

contrary, each party is normally obliged to pay only his or her own attorneys’ fees,

whatever the outcome of the litigation.”275 Delaware courts recognize a narrow

exception to this rule where a party has engaged in bad faith litigation conduct.276

The bad faith exception is applied sparingly and not invoked “lightly.”277 To shift

fees, the moving party must demonstrate “by clear evidence” that the non-moving

party acted with subjective bad faith.278 “Although there is no single definition of

273

See Athene Life & Annuity Co. v. Am. Gen. Life Ins. Co., 2019 WL 3451376, at *8 (Del. Ch. July 31, 2019) (observing that “equity is superfluous” where declaratory relief affords the requested protection, and that “this court does not enjoin hypothetical future breaches of contract”).

274

See Pl.’s Post-trial Opening Br. 60-64.

275

Johnston v. Arbitrium (Cayman Islands) Handels AG, 720 A.2d 542, 545 (Del. 1998). 276

Gatz Props., LLC v. Auriga Cap. Corp., 59 A.3d 1206, 1222 (Del. 2012). 277

Auriga Cap. Corp. v. Gatz Props., 40 A.3d 839, 880 (Del. Ch. 2012) (citation omitted), aff’d, 59 A.3d 1206 (Del. 2012).

278

Shawe v. Elting, 157 A.3d 142, 150 (Del. 2017).

bad faith conduct, courts have found bad faith where parties have unnecessarily

prolonged or delayed litigation, falsified records, or knowingly asserted frivolous

claims.”279

Techno-X contends that fee shifting is warranted because Spartan Forge

violated “unambiguous” contractual language, advanced “speculative defenses,” and

engaged in dilatory tactics.280 I previously sanctioned Spartan Forge for its pre-trial

discovery conduct, which sufficiently remedied that specific prejudice.281 Beyond

that, the defense of this action—while unsuccessful—was not glaringly egregious or

fraudulent. Taking aggressive positions that prove baseless after trial does not,

without more, demonstrate bad faith.282

Accordingly, I decline to depart from the American Rule. Each party will

bear its own attorneys’ fees and costs.

IV. CONCLUSION

Judgment is entered in Techno-X’s favor on its claims for breach of the

Exclusivity Provision in the Term Sheet and for breach of Sections 8.2(a)(v) and (xi)

279

Johnston, 720 A.2d at 546.

280

Pl.’s Post-trial Opening Br. 61-63.

281

See Order Granting Motion to Compel (Dkt. 54).

282

See eBay Domestic Hldgs., Inc. v. Newmark, 16 A.3d 1, 47 (Del. Ch. 2010) (explaining that “vigorously defend[ing]” one’s “legal position without making frivolous arguments” is not “glaring[ly] egregious” conduct supporting fee shifting under the bad faith exception).

of the LLC Agreement against Spartan Forge. Judgment is entered in Techno-X’s

favor on its claim for breach of Section 7.2(c) of the LLC Agreement against

Thompson in his capacity as Managing Member. Judgment is entered in Spartan

Forge and Thompson’s favor on Techno-X’s remaining breach of contract claims

under Sections 8.2(b), 8.4, and 9.9 of the LLC Agreement. Judgment is entered in

Techno-X’s favor on Spartan Forge’s counterclaim seeking a declaration that the

Involuntary Termination was valid. Techno-X is entitled to $1 in nominal damages

from Thompson and the declaratory and equitable relief described above.

Within 10 business days, the parties must submit a proposed form of order to

implement this decision. The parties must also confer on and file a proposed

scheduling order governing the resolution of the remaining claims in this action.

Techno-X USA Inc. v. Spartan Forge LLC

Authorities cited

Opinion · public domain